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Squawk on the Street

News/Business. Melissa Lee, Carl Quintanilla. Opening bell market action. New.

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Europe 47, At&t 39, China 27, Us 26, Spain 25, U.s. 20, Apple 10, London 10, Greece 9, Scott Thompson 9, Simon 8, Hertz 8, Italy 8, Caterpillar 8, Kansas 8, S&p 8, Martin Franklin 7, Jim 7, Verizon 6, Cisco 6,
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  CNBC    Squawk on the Street    News/Business. Melissa Lee, Carl  
   Quintanilla. Opening bell market action. New.  

    July 24, 2012
    9:00 - 11:59am EDT  

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i love 15% better but 20% is still going to be very, very good. i think the taxation side is not going to be at all punitive. >> professor, thank you for being with us. >> absolutely. >> this was fun. >> we'll be back here tomorrow. >> make sure you join us tomorrow. "squawk on the street" begins right now. good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with melissa lee, jim cramer, david faber live at the nyse. stocks coming off their first back-to-back triple digit losses since april and the earnings flood continues today futures moderately down about 25. data out of china and europe as well. not all of it bad but not all of it good. in europe this morning the market is also mixed with the ftse down almost five points. >> we begin with two high profile warnings. u.p.s. and texas instruments lowering forecasts citing increasing uncertainty and in u.p.s.'s case a double digit
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drop off in asian exports. are these bellwethers sounding the alarm? >> at&t with a pretty solid quarter, stronger wireless margins, low turn. smaller than expected drop off in iphone activations ahead of the release of the iphone 5. >> some say that could be good news for apple which is of course reporting tonight. the streets open at 10.36 a share. >> the pain in spain continues. yields crack 7.6% on the ten year as eurozone pmi contracts again. moody's officially warns that germany is not immune. first up, shares of u.p.s. falling in the premarket. the package delivery company reporting earnings of $1.15, two cents below estimates. revenues missing forecasts as well. u.p.s. also lowering its full-year outlook due to the economic uncertainties in the u.s. and europe and weakness in asia imports. meantime, texas instrument's current quarter guidance below estimates as well the chip maker citing consumer caution in the wake of global economic uncertainty.
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guys, i'm trying to think back. jim, the last time u.p.s. had anything good to say about the global economy. >> u.p.s. has become a very political company. they cite the train wrecks, europe, fiscal cliff, asia have become a microcosm for what is wrong. they are a good company so it's not like they conceivably are making too many excuses. i mean, look. they have u.s. domestic revenue increased 4.1% over prior year. >> right. >> that means don't give up on amazon which has been very strong stock. i think they are a company that wants to say, hey. everybody, take a look. it's the politicians. we could do well otherwise. i think that's important to point out because i think that is subtly through all the ceos i talked to. washington, europe, get it together and we can roar. they're not getting it together. >> u.s. volumes in terms of package shipments very good up 39% but revenue per package only up 0.6% and that underscores
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what you are saying about the strength we could be seeing from an amazon or other e commerce players because they are making less per package, more of the lighter weight packages because more people are buying things online. again if you could translate revenue per package into that 3.5% gain in u.s. volumes it would have been a much more powerful number here. >> they've made a very big push into europe. >> yes. >> one of the things that's really upsetting about this period is if you go back five years ago you were saying, okay. who is going to expand internationally? who are we going to give a higher price earnings multiple to? companies that go in and take europe by storm? u.p.s., remember they used to do this ad campaign where they were showing kids kicking soccer balls in italy? holy cow. man, what a bad call. >> that wouldn't fly so much today. >> no. that ad campaign right now could take the stock to 68. >> meantime, some of the broad macro stuff they're saying, david, about the second half, 1% growth in the u.s. is what basically they're calling. >> yeah. i mean, top line growth has been hard to come by for a lot of
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corporations that have been reporting. we're what, about a third through the so-called earnings season and while the bottom line numbers, and we heard this from bob pisani yesterday, people who tally up these things have out performed at least estimates more often than not. not on the top line. that is going to be a concern as we head into the second half of this year. i will say that lack of top line growth does seem to be, and this is conversations i had yesterday, adding a little bit of a heart beat on m & a. it's starting to pick up in part because ceos are starting to look at the second half saying, you know what? i still can't look for any revenue growth. maybe i do have to consider doing something. not talking about big deals. >> right. >> but at least the kinds of deals we saw yesterday. >> change at the margin field. i hear change at the margin. that means to me that yesterday's huge numbers and deals though they weren't huge, in the middle of what is the slow part of the year, may be signaling something that we shouldn't ignore. >> maybe. because ceos feel like it comes not necessarily from a good place to this point that carl is making, 1% revenue growth.
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i got to do something. we'll see if it plays out. there are so many other reasons why we will not see a significant pick up. >> in the past ten years, 63% of companies beat on the top line. this quarter it's 42. almost 20 points below the average of the last ten years. >> wow. >> funny because that is probably the percentage of companies that have moved international versus the percentage of companies that are sticking with the united states. >> right. texas instruments, similar story beat on the eps side miss on the revenue side so the same carry over the company also talking about a backlog that is lower than normal for the month of september. they're saying customers just don't have much visibility when you go out to september although the backlogs for the current month and for august look at this point to be normal. jim, that seems like a very troubling sort of forecast that for two months we're okay. but there's a drop off in terms of visibility in september. just september. >> we have to know. i mean, they have got widespread electronics. i mean, how much is nokia?
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how much is not apple? i mean they do have a lot of apple business. i think texas instruments is less of a tell than it used to be. they have been a frankly i thought this acquisition would change it. it's not been a great -- you know, it's almost like we're at a poker game and you say listen, i've got a text in hand and i say i got a domestic company hitting the ball oust the park. you got a company that's levered to european institutions that aren't doing well. more of a balance today because of dupont. i mean, i think dupont is an ag story. coleman has done a remarkable job. so i'm looking on a lot of one hand and a lot of the others. i'm not looking at the hand is just bad. >> briefly, let's just mention we got the flash pmi out of the u.s. which can set the stage for some of the data we get at the beginning of next month. 51.8. estimate was 52. that is the lowest since december of 2010. but i think futures might be up just a touch on this. there is this running theme, jim, that no matter how weak the
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numbers, market is poised to pounce on some sort of qe3 headline. is that why we came back a hundred points yesterday? >> well, also, this is very funny. i had the ceo of eaton on yesterday. he is buying the company cooper. together they'll make the company more in the united states. this was a company, you looked at the headlines and it said cut in forecast. right? >> yes. >> misses estimates. company cites weakness. and then you hear him and you realize united states very strong, stock was yielding 4%. company has gotten more of its control of its destiny. aerospace very strong. automotive okay. truck in a lull right now. you say to yourself maybe this stock has been punished enough. maybe the pmi has been punished enough. maybe we can look at companies and say, well maybe caterpillar or goldman says joy global today. i don't care for -- some people are saying enough is enough. i'm a buyer. >> it is interesting you mention eaton and cap because eaton was
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a riser early in the session up by about 4% by the end of the session. caterpillar is a stock that saw one of the greatest turn-arounds during the session. morgan stanley, bank of america, and caterpillar. i wonder if perhaps the worst -- that there is a willingness, desire to buy caterpillar here on weakness. >> i think cat has had historically horrendous swings. >> right. >> it's not like caterpillar -- caterpillar should never be confused with merck. however, caterpillar's come down big. cummins up yesterday, 120 goes to 80. you get one of these moments where if caterpillar does not lower the boom and does not cut estimates, huge, then it will go up. that is not the kind of story i want. i want at&t. >> yes, speaking of which at&t beating the street with its second quarter earnings. the dow component posting profits of 66 cents a share for the second quarter. three cents above estimates. revenues were essentially in
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line and reporting a drop in customer churn and increase in operating margins. david of course largely this is the story of the iphone cycle. >> it is indeed. it was a good quarter. there is no doubt about it. their ebitda margin in particular hit an all-time high. let's not forget they also had net adds that beat estimates but a good deal of it was driven by this lower churn. what really happened during the quarter is not many people upgraded. not many people left. and so that's a good thing. it doesn't cost you nearly as much to keep a customer as to get a new one. margins go up. you don't have a new iphone during the quarter hence you're not paying out those enormous subsidies. the question for at&t will be of course can it hold the line as we head into an iphone 5? >> right. >> in october when people start to upgrade in a meaningful way. can it still try to keep that upgrade cycle from becoming -- swamping it to a certain extent and not allow as often the upgrades as we've seen in the past or will it see competition
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from sprint and verizon and therefore margins will come down? the question is how much? all that being said, good quarter. would point out as well enterprise service revenues up for the first time in four years. >> yes, yes. >> can usually get a sense of business formation. >> right. >> that is the kind of thing that can be connected to that and so a broader economic reflection but we'll see. that was interesting to see that has turned. >> consumer revenue growth best in fouyears. david, how much did it hurt at&t. >> i don't think very much. >> why? >> because they don't really have -- >> by the way, to that point it is the dynamic of that company largely domestic with the big dividend. >> so good. >> is why we're looking at a chart behind us that is quite meaningful. so you move into this quarter and they have a good quarter but how much of it is already in the stock price that's moved up? >> in the third quarter where there is going to be an iphone 5 launch and the margins as david mentioned are going to come down, just a question of how
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much, do you get into a stock that has 17% one-year rise, a stock which some would argue you're paying a premium for in the market simply because it has a fat dividend because so many investors are looking for that dividend yield? do you get into it at this point ahead of third quarter which could be a tough quarter for at&t? >> apple could be a tough quarter. i think people want to be -- >> apple's second quarter could be tough. the third quarter is expected to be a good quarter. >> right. i'm saying that a gap may not be a reason to sell at&t. at&t is a great investment. the balance sheet, better than the united states. at&t's dividend -- >> about $2.5 billion, more cash flow than expected. not like a media company where they're buying back 10% of their float. >> they have a lot of secular growth drivers. here's an odd one. i remember speak wg the head of att wireless. he said in housing terms you're going to see good numbers. donald trump saying housing numbers. >> we got house numbers this morning too. up in the quarter over quarter
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for the first time since 2007. it's not about median prices. they look at the same types of homes in the same types of neighborhoods. >> tell me about what you compare the ten year, what is the ten year saying versus att? >> the ten year -- >> the competition from something else that has a balance sheet that's in tatters versus a company with a balance sheet that's beautiful. >> your point is why buy a ten year at 1.4% when you can buy at&t? >> especially when i think 1.4% could go to 1.2. >> right. yesterday you say potentially 1%. >> well, you did a -- i know you've got coffee. i don't want that to happen again. i have a clean desk here. >> forget that. >> anybody who wonders what churn is, has nothing to do with butter. >> correct. just how many people fall off. >> good. because butter is soaring. >> you make your own butter i'm sure.
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>> i churn every night, man. >> listen to the tortoise. >> he milks his own cows. >> tortoise. take the five-year view. >> the biggest earnings report of the day is tonight obviously the world's most valuable company apple expected to earn 10.36 a share in the fiscal third quart wer revenues of almost 37.2 billion. the watch is on to see if apple will report slower iphone sales for the quarter as customers wait for what many expect to be an iphone 5 in october. shares of apple have rebounded after taking a dip in may up about 8% over the past three months. i remember last quarter, guys, at&t also came out right before apple and gave us an bit of the head fake in terms of the read that apple eventually gave us. would you look at the activations of this iphone and say that -- >> i don't know. i talked to a couple people this morning who say don't read anything into it at all from at&t. it's just not a valid predictor. >> would you think sprint would be more of a predictor? >> i don't know. not necessarily. especially because of where you are on the cycle what's going on. then you've got china figuring in to apple so importantly in
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terms of what that is going to be. for what it's worth at least a couple people that i asked this morning didn't seem to read much into the at&t numbers at all for a read through to apple. >> do you want to miss iphone 5? do you want to miss apple tv next year? do you want to miss these things because you're worried about a quick 3% decline in the stock or 5% decline? this is not chipotle to me, being, you know, that's the death penalty. chipotle was the death penalty. >> still sitting on an enormous amount of cashment they haven't really done anything with it. >> pay off the dividends. >> right. >> that will be one use of cash. and whether or not they do acquisitions. that is to be seen. >> right. >> tim said in the previous conference call they are exploring all options when it comes to using cash including some acquisitions. you know, that's to be seen. the big question here is do you use this, if this is going a weaker quarter do you use this weakness whether it be on the earnings report or right now to
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get in before what is expected to be a very strong back half in front of a very strong product pipe line? >> to me the answer is yes. i think this is in a rare era where almost nothing seems to have substance this is an investment. i don't think there are many companies that we can say i want you to invest in apple other than at&t. i think that's been a good investment. verizon. we have a lot of dow stocks that have been okay. pfizer gets it today. >> in part because of the alzheimer's -- >> yes. you want to own apple. also, i wish apple would buy twitter. remember the holy grail is you need social -- you need mobile and you need cloud. it's been working. the holy grail. obviously like the snap comment where i talk about confidence, poor, cash rich. i'm going to give mark from salesworth credit because i am so sick of stealing other people's stuff. >> you're sick of it. think of them.
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>> i always e-mail mark. i say, mark -- >> that's my enre career is doing that. >> just appropriate. >> all of my good sources who don't want to be named and i say, fine. i'll take exactly what you're thinking. >> is that how it works? >> yes. >> all right. meantime of course we are keeping a watch on europe. more fallout here as spain's short-term credit debt costs continue to rise. spain paying the second highest yields in the euro era in selling $3.7 billion worth of three and six-month t-bills. the spanish five-year yield now spiking above 7.6% and surpassing the ten year for the first time in 11 years. yield inversions is what we're seeing there all on top of moodies cutting its outlook for germany, the netherlands and luxembou luxembourg. a lot of people saying not a big dial. who cares? it's moody's. we are seeing some impact when it comes to the german boons today which are seeing a slight
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decline. >> well, i have the negative yield. >> my favorite strategist in the world, from jp morgan, puts out a note talking about the size of spain. and every time you read about the size of spain it takes your breath away. this is a country that is so much -- that so cannot fail. it just cannot fail. >> people want to say portugal, greece, and spain. it's silly. you're talking about a $2 trillion economy. you're not talking about greece with 9 million people. this is a real economy and by the way the inversion of the yield curve there or at least the fact that people want to be paid more for five years than for ten is not a good sign. it is clearly a reflection of people's concern about default. there is no doubt about it. >> just reading the moody's note, they sort of crystalize some feelings i think we all have about europe. they mention what they call a continue united and reactive policy response. can't argue with that.
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will not produce stable outcomes. will wieckly be associated with a series of shocks which were likely to rise in magnitude the longer the crisis persists. the longer this goes on, jim, the higher the risk look. angela merkel has always pulled us back from the chancellor of germany from the abyss the moment we get there which is why we've had these terrific rallies when ultimately the auction is over so to speak or when she says, you know what? i'm going to relent. if there is no growth in europe, if there is no growth in europe then spain is dead. there must be growth. >> right. the german finance minister is pushing spain of course to enact more measures that will help the economy so that they'll give them more assistance before he departs on the three-week vacation. that's all. >> well, i guess it's not that important after all. >> three weeks. when was the last time you took three weeks off? >> never. >> how is never? good for you? >> never. never. >> when we come back this
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morning an exclusive with executive chairman of jardine martin franklin on the consumer conglomerate's earnings whose brands include sunbeam, crock pot, mr. coffee has seen its stock jump 45% year to date. one more look at futures. got a little rebound on some of the flash pmi numbers. we'll get more when "squawk on the street" comes back in a moment. tdd# 1-800-345-2550 the spx is on my radar. tdd# 1-800-345-2550 we're hitting new highs. tdd# 1-800-345-2550 and i'm on top of it all with charles schwab. tdd# 1-800-345-2550 tdd# 1-800-345-2550 i use streetsmart edge and its tools like... tdd# 1-800-345-2550 screener plus - i can custom build my own screens tdd# 1-800-345-2550 or use predefined ones. tdd# 1-800-345-2550 and i can trade wherever i want, tdd# 1-800-345-2550 whenever i want. tdd# 1-800-345-2550 the kicker? tdd# 1-800-345-2550 i pay $8.95 a trade. tdd# 1-800-345-2550 that's a deal in any language. tdd# 1-800-345-2550 open an account tdd# 1-800-345-2550 and trade up to 6 months tdd# 1-800-345-2550 commission-free. tdd# 1-800-345-2550 call 1-866-393-6174.
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remember scott thompson the former ceo of yahoo who left the company two months ago following the flap over the misstated credentials on his resume? as of monday the ousted ceo now has a new job running a smaller, private rival to amazon called shop runner, an online shopping start up. brings us to this morning's squeak on the tweet asking you to tell us what exactly on scott thompson's resume caught the eye of this new company? tweet us at cnbc squawk st and we'll get to your responses later on in the morning. i mean, i sort of imagine it as a bullet point for what did you do at yahoo? right? recruited various employees and also told them i had a degree in computer science when i did not. >> yeah. and then blamed the search firm. >> i still love the dan lobe letter where he said after conducting a rudimentary google search he discovered the discrepancies in scott thompson's resume. >> i think when lobe began that effort i have to admit i did not
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expect it would end with the departure of mr. thompson. thompson also played it very poorly along the way not being completely honest with his board. that was really where it ended for him. >> absolutely. we look forward to getting your responses. meantime, still to come, getting off to a head start on today's trading. the cramer ways. mad dash is next. another look at futures here as we head to the tuesday bell on this tuesday morning on wall street. we are looking to open lower here at least for the s&p and the dow. the nasdaq looking to eek out a gain at this point. more "squawk on the street" straight ahead. between black and white answers... ...and 1,000 shades of grey duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services.
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let's get cramer's mad dash four minutes before the open. we are awash in earnings and some surprise frs the likes of underarmor. >> i think kevin plank, the ceo and chairman, must be congratulated here. here's a company that had sales growth that was in excess of its inventory. this is a company that raised numbers. they are a -- i know this is going to sound weird. a technology company. this coal black -- these clothes that actually keep you cool during the hottest point, this is a remarkable company, direct to consumer business 29%. my hat is off to them. like the f corp where they also snatched victory from the jaws of defeat. >> yes. how can ua exist in the same world as nike after what nike
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told us? >> this is a company that hits them where they ain't. though they do have a small shoe business. they have become the specialty apparel play for people who really are let's say more perfect -- if you have a kid who is a good athlete this is what they want. they want under armor. >> a good point. i'll get the opening bell after a short break. don't go away. [ male annor ]let's level .
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and we'll throw in up to $600 when you open an account. tail end of the opening bell there as the dow has had its worst two days since june 21st. we've lost about 222 points. of course two straight triple digit losses. haven't done that since april. at the big board this morning the new municipal value fund celebrating its anniversary. and a biopharma focusing on cancer treatments over at the nasdaq. >> a terrific speck, working on a pancreatic cancer drug. this is a company if you want to speculate, believe it. >> tough disease. took sally ride just this week. incredible. what a life. what a career.
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we haven't touched so many numbers, jim. let's start with dupont. >> geez, i tell you. once again this stealth ag bull market. the stock isn't doing anything yet but ag numbers are extraordinary. got a big european business. it's so funny. it's just the same verbage every single time which is if it weren't for europe, if it weren't for europe, and, you know what? there is europe. and no one is saying, well, hey, that's okay. we'll risk it. hey, you know what? if it weren't for steroids this guy would have had -- if it weren't for the problem at penn state -- you know what i mean? >> i do. >> you cannot asterisk things and have any credence. people just say well dupont does have europe. but a good quarter. >> they beat in fact every quarter on the eps line since january of '09 which was the time when the ceo took over. >> she is terrific. >> she has been delivering on at least the bottom line. in terms of europe 8% volume drop. 10% drop in chemicals and a lot of that is attributable.
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i thought this was very interesting. to a lack of demand for ti-02 a titanium additive for paints to create that white pigment and so there are very few producers of this out there but huntsman is one of them so that could be one area you look for as a derivative of this dupont result. >> this is toothpaste. you can't have toothpaste be white without ti 02. there has been a shortage. they try to make a synthetic -- this is just one of those chemicals that there are periodic shortages. >> right. >> there was a shortage in the late '90s in this thing, late '80s, that was horrendous. and high tops was a company that tripled overnight. >> unbelievable. >> a narrow topic. >> what is it called? tio. >> it's from a very sparkling, gray mineral tachonite and there is not enough in the world. >> all i know is she is a tough
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graduate. >> i begged her to come on the show and i'm begging her right now. begging you right now. i know you watch the show. come on. >> we'll talk about tio 2. >> why not? >> sure. >> speaking about europe and blaming europe, whirl pool the same story there. although hard to imagine people are looking for a great story out of whr. we have not yet touched on that or, david, on newscorp and some of these charges coming from british prosecutors. >> i know we'll learn a bit more about that. of course the actual arrests again and real charges on newscorp. as we pointed out so many times though when it comes to newscorp the hacking scandal gave an opportunity to shareholders last summer to buy as much as they possibly could. the stock up sharply. the biggest news on newscorp of course over the last few weeks has been the plan to split the company in two. that continues. but we are still watching that hacking scandal closely. it is not by a long shot done. >> as for whirl pool this had been a favorite amongst investors looking for exposure to the housing sector this year. that stock is up 42% this year.
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this earnings was a real disappointment given the stocks were on their biggest selling area of course is north america and that is where they're seeing the stiffest competition when it comes to pricing from the likes of a samsung or lg. you name. it's a tough business out there selling appliances. >> i know a lot of people felt electrolux would be okay. remember brazil -- whirl pool has failed to execute for so many years that it really is a tale of nothing. >> yeah. >> it's a tale of nothing. >> it's not a bellwether. there is no read through. >> it's a tale of -- it signifies nothing. >> all right. >> take a look at shares of alon a big mover in today's session down about 15% yesterday after the bell. it was disclosed that pfizer and johnson and johnson and alon their alzheimer drug failed to meet an important end point for one of their studies. obviously a much bigger impact for eln shares.
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>> the hopes are they'll figure something out but maybe they actually need to treat people long before they actually start really having this plaque so to speak that may be linked to alzheimer's. >> meantime j & j, i remain a huge believer. >> i know you do. >> and the new ceo. >> yes. i just keep waiting until he screws up and ends up on the wall of shame. >> this guy -- u.p.s. by the way moving up. this market is so resilient. we got to talk resilience for heaven's sake. u.p.s. today at 74. >> isn't it amazing how many new ceos are having to come in and handle a tough situation? i'm thinking meyer, yahoo, j & j, thompson at mcd. meg still at hewlett-packard. it's like baptism by fire. not even young execs. >> that mcdonald's call was very interesting because it was one of these things where how could
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this be economic sensitivity versus 2008 and 2009? mcdonald's said here's the deal. in 2008 and 2009 people thought it wouldn't be long lasting. now people are resigned to the idea and they want to eat at home. they want to eat at home. now if that's the case, chipotle saying very similar, bgs, this is david wehner, the company that you -- otega. you make the mexican at home. i think this company reported a quarter that people weren't that crazy about. stock is up. it's got a good yield. this guy has been a monster performer. i can't wait to talk to him. look at that. six flags. talk about staying at home and stacation and cedar fair was good fun, simple fun. >> yes, simple fun. >> just left me out there didn't you? >> medieval dinners and such. dressing like -- eating drum sticks. i mean -- >> sometimes it's hard to get federer's serves back to him. i
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>> i might look at my screen for a moment and if i lose the train i'm done. >> look, okay. i like to throw a lot at people. >> now to pickles. five seconds flat. >> don't forget regina. not my executive producer for "mad money" but the fabulous balls samic vinegar. >> i was thinking about salsa with the ortega. then of course i went to margaritas and that's it for me. >> how about cream of wheat when it gets cold? >> anyway, you guys can continue discussing. let's check in with courtney reagan on the floor here with what's moving this morning. good morning, courtney. >> good morning, melissa. i like what jim was saying earlier. you can't discount europe. you can't not pay attention to what is going on over there. in the last couple days, the short selling ban, worries about potentially a very big bailout for spain. last night moody's adding insult to injury cutting their outlook for some of the stronger, healthier economies. germany, the netherland, luxembourg all of that really
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pressuring some of the weaker economies today. we have spain and italy considerably lower than the rest of those european indices. spain's ibex below 6,000 and poised to close at least at a nine-year low. if you look at italy here we're ontrack to close at least at a decade low today. so a lot of weakness in europe. you cannot ignore it. you cannot put brackets behind it and push it aside. you have to pay attention in this very global economy. that spanish ten year above 7.5% yet again. these euro era highs just going higher and higher for spanish borrowing costs. very unsustainable levels. the german boon hit record lows yesterday but again after what moody said about their outlook, it's pushing those yields higher for the german boon. something i know we'll watch going forward. if you switch back to -- we had a lot of good news in the united states. talking about tobacco, we have gold, altria and reynolds both trading near all-time highs.
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lorillard out tomorrow. ryder systems, a trucking company having the best percentage gainer looking at all of these earnings reporting today. they did beat the street on their profit, excuse me therks raised their full-year guidance. part of the transports which had been underperforming the industrials the last few days and most june and july. home builders better than expected. this could continue to be a bright spot. something we have seen as of late. we have a lot more housing data going forward this week. back to you. >> thank you so much. let's get more on the buy deals. that incredibly stimulating discussion this morning which was just can't miss. i hope people can come back and watch it on squawk. i loved it. rick, take over. >> a lot of issues going on globally for sure, jim. if we look at just the ten-year segment today, knowing that in the u.s. outside of a two year pretty much everything three years and beyond, you know, is within or has created a new
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historic low yield. if you look at a two day at tens we're up a little bit at 145. you can clearly see yesterday's activity. if you look at the boon the outlook changed. definitely took its toll a bit. because its historic low yield close is 127. it's closer to 112. if we look at some of the other countries with funding issues and not necessarily pursuant to our fund discussion this morning, it isn't so much the level of yields. if you look at our ten year over the last six years its average rate is probably around 6 3/4. it's about solvency and economic growth. anything is too high if you can't afford it. so if you look at portugal their ten year is around 1 is%. if you look at what's going on in spain their ten year is now over 7.5%. you look at italy their ten year is approaching 6.5%. we don't even look at greece post its bailout but if you did look at one of the maturityies that is actually trading a bit their ten year hovering between 27 and 28%. forget that. it's trading at basically 17
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cents on the dollar. i remember a number of years ago when gm and ford corporate paper was trading there. insolvency was the only topic of discussion. jim, back to you. >> terrific. thank you so much. let's check out the latest moves in energy and metals. remember big decline in energy. sharon? >> we are looking at oil prices that are about to go around a bit with the action that we're seeing in the dollar but they are slightly higher. at the moment. what traders here on the floor are telling me is this is a market that really is searching for direction. you have the bulls that are saying anything can happen with iran and they're looking at the violence in syria. they're watching every headline and they're saying that we could see a tremendous run up in prices at any moment. and then there are others that are looking at the financial situation in europe as rick outlined very well. the problems that we're seeing in spain. what is happening to yields there. all of those issues that will continue to point to lower demand for oil. and then you add to that what we're seeing out of china in
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terms of the flash pmi data that we got that was better than expected but still below 50 still showing the manufacturing may be contracting there. all of these are worries that could pressure oil prices. so you see a lack of momentum right now as those two sides that are really quite divergent in their views really grappling to see what direction oil prices will head in next. we are of course going to look for the inventory data that will be coming out from the industry trade book this afternoon and then tomorrow morning from the energy department that could give some short-term momentum to this market place but again it's waiting for those headlines particularly on the geo political risk that could really influence this market traders say. back to you. >> all right. thanks very much, sharon epperson. i want to take another look at shares of at&t this morning. one of the most widely held equities in this country of course. it has been quite a strong one of late. falling into two distinct buckets there of great desire amongst investors that being a high dividend yield and largely domestic business. there you see shares of at&t up
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again because it did deliver this quarter. now let's not forget where it's been when you take a look back. just a little bit there. >> wow. >> not talking about today. i'm talking about over the last month or so you'll see the stock is -- has been up there. quite nicely. but they did deliver. why? well, the quarter itself driven by in part what was a net add number that was better than anticipated in terms of second quarter over all. net additions of subscribers. now that was aided because there was an extraordinarily low rate of people falling off. you have fewer people falling off. gross adds not as much. there is a look at post paid churn for the company. that all of which adds to your ebitda margins overall. you're not paying as much to acquire as many customers. you're also, because you don't have as many activations of live phones and you're spacing out your activations if you will, you're not paying the bigger subsidies. that helps also. we talked earlier in the show
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about whether that will continue to be the case for at&t as we move into this iphone 5 period, melissa, which is only a few months away at this point. >> i was curious. i would love to see what the wireless margins were when the iphone 4s was released just as a comparison for fun. >> right. >> that would be probably third quarter of last year, fourth quarter of last year roughly. >> we can look at wireless ebitda service margins. at&t versus verizon. again, this is an area where at&t has been quite sensitive over time. so they really have in this press release this morning made a big deal of the fact that hey look. they moved it up a lot. >> wow. >> there is a look at verizon. which by the way did not get a lot of earnings per share improvement even though the margins were at an all time high. and that stock is some would say expensive that being verizon. both of these have been very strong performers and then there is sprint. i thought we could take a look at that. >> i like sprint very much. the preferred keeps going higher and it's real. >> as they decommission the old nextel network and there is a
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look at what we've seen in that stock. that's the one we're waiting for. of course we'll also get a sense there on iphone activations and everything else. but sprint is an interesting -- has made quite a move. we'll see whether there is more behind it. >> interesting elephant in the room. one of the smartest things at&t ever did was destroy t mobile with that issue. >> you think so. >> yeah. i think they destroyed -- ceo recently stepped down, young guy, terrific guy. t mobile's momentum ended. it's almost like j.c. penney being carved up by a lot of other companies. >> right. >> that t mobile was just a competitive company that got taken out. yes, they got a big check from at&t but att was the real winner in the end. >> many people anticipate at some point t mobile's parent deutsche telekom will sell the company to sprint. >> yes. >> and end up taking a very large stake in the overall company that being a combined sprint and t mobile. then you will have potentially a real third competitor so to speak which is probably something being raised by
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regulators in the u.s. reel ty's still largely a two -- >> a great way to call it. i'm going with that call. >> let's get to our twitter question this morning after leaving the top job at yahoo in disgrace scott thompson has found a new home as ceo of shop runner an online shopping start up. what exactly on thompson's resume caught the eye of this new company? tweet us at cnbc squawk st. we have your responses coming up. as we head to break take a look at this morning's early movers here on wall street. between listening to the numbers... ...and listening to your instinct duff & phelps finds
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to watch one of the drama's characters carry the torch through the fictional burough of wallford. hundreds of experts were brought in for this which aired as a live section of the prerecorded drama. the torch has been carried through britain for more than two months by athletes, celebrities, children, soldiers, and ordinary citizens. it'll be used to light the olympic calderon on friday night during the opening ceremony and we should note nbc's full coverage of the olympics begins this friday july 27th. we'll be there live in london from the olympic village to bring you all of the latest developments. interestingly, this afternoon men's basketball faces spain in an exhibition game not unlikely they may meet to fight for gold as they beat spain in beijing to win gold. >> congratulations to you. you look like an olympic athlete in that picture. you really do. >> thank you very much. >> i can guarantee, assure you
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i'm not. >> this guy was running a torch through a fictional town. i don't understand that. >> i wish i knew the back story on that. yeah. >> okay. >> by the time we get there it will be lit. of course friday. it's not that far away. olympic park has a lot going on already. >> right. >> it's going to start. >> very exciting. >> i love them. i'm good to them. >> hard not to get wrapped up once again. i tell you that much. dow is down about 40 points. 41. a lot more "squawk on the street." back after a break. [ male announcer ] summer is here. and so too is the summer event. now get an incredible offer on the powerful, efficient c250 sport sedan with an agility control sport-tuned suspension. but hurry before this opportunity...disappears.
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simon hobbs back from boston rested and ready to get us started at 10:00 am. >> absolutely. good morning. we'll get the latest trades and analysis on where we are with u.p.s., at&t, and importantly
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the read through for apple tonight which is actually quite positive according to some analysts. david will have an exclusive interview with executive chairman martin franklin and also some takeaways from the big business travel conference i was at in boston a over capacity for the hotel chains in china and also talk about how the airlines are now going to attempt to tempt you on to their flights and the inside of the cabin more than anything else. back to you. >> there have been a couple headlines on that. thank you very much. time for six in 60. six stocks in 60 seconds with jim give or take a few. deutsche, watch tractor supply. >> this stock has come down a lot because of the drought. i want to be careful. i think this is dicey. >> all right. u.p.s., sell radio shack. >> i want to tell you i think it is too early to buy radio shack. >> dominos pizza light on the top line. >> do people not recognize this is a company, a franchise company. the cheese cost isn't that great. the apple app is strong.
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fabulous. >> jcp. oppenheimer says now is the time to buy. >> probably now close to 34% with the turn-around. they made a sale, raised some money. enter at your own peril. >> whole foods. we've already gotten chipotle. cowan and rbc say buy ahead of earnings. >> i think there will be good. i don't like to buy ahead of earnings. goldman says monster is okay. i don't touch the stuff as much as people think i do. >> for more on those names sots.cnbc.com. b & g tonight? on mad? >> a little company. the domestic securities has a good yield. david wehner runs it. the best performing stock other than apple and att that "mad money" has recommended. >> you want to take a guess as to the tone that apple takes tonight? >> i think that apple is constructive. a very inexpensive struck. he is a great investor and said this is the cheapest stock he follows. i totally agree. >> see you tonight 6:00 and 11:00 eastern time. >> thank you. when we come back getting
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welcome back to "squawk on the street." u.p.s. delivering a miss in the second quarter as the transport also slashes its full-year profit forecast citing some increasing uncertainties. so is this economic bellwether an indicator of even more bad news to come? >> and at&t posting an increase in both profit and revenue as the wireless subscriber growth came in better than expected? >> and the man behind london's heathrow airport gives us a sneak peek into travel challenges he'll face ahead of friday's kickoff to the 2012 summer games. >> plus, david will have an exclusive interview with jarden executive chairman martin franklin on the back of the blowout earnings. >> in london announcing criminal charges against eight people in connection with britain's phone hacking scandal including importantly former rupert murdock aide and close confident
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rebecca brooks. >> simon, today's charges are the culmination of an ongoing police investigation that turned over evidence to the uk's top prosecution agency in the last month. the result of that evidence, eight individuals charged with 19 separate charges. the over arching one is conspiring to intercept communication unlawfully during a six-year period ending in 2006. rebecca brooks, former chief of news international and one-time editor at the sun and news of the world also charged with conspiracy to intercept voice malice of the murdered school girl milly dowler as well as the former boss of the uk's firefighters union. brooks in a statement though says, quote, i am not guilty of these charges. i did not authorize nor was i aware of phone hacking under my editorship. the charge concerning milly dowler is particularly upsetting not because only it is untrue but also i spent my entire journalistic career campaigning for victims of crime. she'll likely have a chance to contest these charges at a court
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hearing in september originally scheduled to defend previous charges she obstructed justice in her earlier testimony. also singled out today andy colson prime minister david cameron's former top press guru and glen wilkera a private investigator once hired specifically by the organization to uncover personal details about persons of interest for newscorp publications. one charge today for example concerns the hacking of angelina jolie and brad pitt. today's charges are just some of the first in 24 arrests in what police called quote operation weeding the code name for the investigation on phone hacking also ongoing op elveden arresting individuals over bribery charges and operation tuleta arresting seven in connection with computer hacking. we certainly expect more activity on this front today. it is a very, very big day in this case. >> in fairness to murdoch press we should say of course there are other newspapers, the express group, trinity newspaper group, that are also involved in this. perhaps a hundred allegations
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according to scotland yard. it was endemmic in british society. >> it really was. it's what they've been dealing with for the last year is how endemic this actually was to the culture of the press in the united kingdom. >> for the moment, thank you. >> want to bring your attention to the richmond fed starting to get some regional surveys. philly fed as you remember not too good. richmond also relatively weak. minus 17. stocks were down about 50 points or so ahead of it. adding to their declines. comes after we got the u.s. flash pmi as well which was slightly below expectations. >> all right. now back on to the earnings onslaught from this morning. let's kick it off with u.p.s.'s big miss. a transport missing on both the top and bottom lines cutting the full-year outlook as well. the managing director and transportation analyst with stern ag. they are extremely cautious as they have been in recent quarters. how do you decipher what they're telling us about the global slowdown? >> actually it's a little bit of
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optics. the currency exchange is about 400 basis points of a slowdown in revenues. the euro has dropped about 10% versus the dollar. so some of this is optically but we were looking for a buck 15 and they earned a buck 15. we're seeing the intraasia, intraeurope okay. where there has been a slowdown is asia export u.s., asia export europe. what they are saying talking to customers is because of the political stalemate in washington a lot of businesses were very concerned about fiscal cliff. a lot of businesses are very concerned about the election. so they don't expect a big restocking that they normally get in august/september and really that's where the biggest drop in the forward outlook is. it's domestic and the restocking we're seeing this fall. they are looking for stronger profits as they head into the fourth quarter. >> jeff, did you get any color as to which types of consumers and industries are seeing the most uncertainty when it comes to restocking? >> they're seeing the changes on
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the b to b side and i think this is just business as being conservative. and rather than wait to see it what they're telling us, look, we're talking to our customers, not going to see a lot of outborn exports to europe, not going to see the traditional fall restocking we're heading -- we will get restocking in some industries like retail for the christmas season but maybe not to the extent a lot of people had been hoping. so they're getting out ahead of the curve and saying listen. we'll take down our capacity, baton down the hatches. but they're still throwing off almost $3 a share free cash flow and their earnings growth is still going to be pretty strong. >> jeff, do you question the strategy of doubling down in europe with the purchase of the dutch company tnt express? and if you are concerned about that, given what they're saying about europe, what asia europe, do you think the regular investigation could get them the get out of jail free card on that transaction? >> well, let's keep in mind that u.p.s. is looking at this from a 10 to 20 to 30-year strategic
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standpoint and with the drop in the euro almost 10% versus the dollar over the last couple months, this transaction just got 10% cheaper for u.p.s. so even though our growth outlook for europe may be lower, in terms of giving them a strategic position in europe that no one else will be able to sneak up on aka fedex and making them a big player in asia, this is very good strategic acquisition. it just got cheaper for the company but admittedly maybe the profits were expecting over the next year or two from this combination might not be as were envisioned six months ago. >> jeff, with that said do you still anticipate the transaction will be up to 2013 earnings? >> we do. there are a lot of efficiencies the company will be able to generate. i know they said socially they're not going to shut down offices but tnt flies a fleet of aircraft around the world. i'm not so sure those are necessary. there are going to be locations where there is duplicity in europe between the u.p.s. network, tnt network. they will be able to go to
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customers that they couldn't go to previously and we got a billion dollars worth of u.s. priority mail line haul revenue up for grabs right now. possibly between their intermodal network which is very strong and the increased international exposure u.p.s. may be in a better position to compete for revenue. so i do think it'll be acretive but in terms of translation back to u.s. dollars in the near term maybe not as strong as people were thinking. >> jeff, good to talk to you. >> also watching shares of at&t after the telecom company did beat on the bottom line. a little light on the top line this morning. just barely. mike mccormick is an analyst over at o'merea and joins us on at&t. good morning you to. >> good morning. >> looking at all the internals, churn, margins, adds, was there anything that fell short in your view? >> yeah. i think you hit it on the wireless side certainly everything was firing on all cylinders this morning. wireless margins were at least 200 basis points higher than the street. i think you'll see that continued through the balance of
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the year. in the third quarter typically a very low volume quarter. particularly thinking about the fourth quarter impact of the iphone and refresh which is really the quarter that all eyes are on. and that's going to be sort of testing the discipline of the carriers. what we're seeing is this duopoly developing between at&t and verizon rising up above the rest of the pack and saying we're going to be a lot more conservative on upgrade policies, charge for upgrades and also lengthen the window for upgrades. what you saw today, and i think you continue that in the third quarter, are very low upgrade rates which result in strong margin profiles. >> right. >> the only weakness to your point is a little bit weak on the wire line side. wholesale revenue came in a little lighter than expected. on the positive side, enterprise held up pretty well. that compares against verizon which put up a relatively disappointing enterprise number. >> enterprise revenues up for the first time in four years. of course watching the stock actually down 1%. perhaps a bit of a surprise though it has had a great run. you know, i am curious though. what are your expectations for the fourth quarter in terms of the willingness and ability of verizon and at&t to hold the
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line against apple specifically to the subsidies that you're talking about, which i think over the course of this year exceeded what they spend on capital expenditures? >> yeah. it's going to be extremely important for the carriers and i think again third quarter is not going to be a great test of that because you typically have such a low upgrade quarter in front of that iphone refresh. we expect light volumes in 3 q followed bite big test in 4 q. and, you know, to your point if they actually hold these policies we could have better margin profiles that being said if you compare the stocks at&t's expectations for fourth quarter profitability are quite low if you look at the street overall. >> topeka is taking this figure of 3.7 million activations on the iphone as very positive for tonight's results from apple. i know they suggest it will propel the stock above the price target of a thousand dollars a share. i know that's not your main focus, mike. but that 14% decline quarter on quarter is not bad is it not given where we've seen them
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suffer declines in the past? >> no. i think that is a fair point. if you look at the year over year they actually put up very similar numbers for iphone units as well as those that are new to at&t. so on a year over year basis being pretty steady in the face of the new policies i think it bodes very well for apple. and again, i don't expect to see, we've put in models for the overall industry. i expect very similar numbers in q 411 to q 412. i think it bodes very well for apple. >> i don't know if you can look at a three month or a six monlgt. obviously a fantastic start to the year. ever since mid june or so sort of waffling here in the 36, 34 range. have these topped out for the year or is the second half more in there? >> yes. it's been a debate among many investors. we've had a great run in both at&t and verizon. as you might know a 10% or 15% run in a large cap stock like this is fairly unusual. and i think you guys talked earlier in the show about it but thinking about dividend yield
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spread versus the treasury is really where investor focus is currently. if we look at traditional valuation metrics whether p ratio, ebitda, these are metrics that don't look historically attractive at these levels and yet looking against the treasuries look very strong. it is going to come back to the fourth quarter behavior. if we can have margins hold up relatively well the dividend yield play can continue. if they don't then you'll have people start to question just how safe are these stocks? are they really like an altria or procter & gamble? is this the same safety of a dividend we're looking for? >> in terms of the margin profile, mike, what would that be? is there a comparison where you would take a look at passporters where there was an iphone launch and therefore the margins might be a little bit of a hit? >> yes. i think if you look at expectations and again i think coming out of today you'll have a meaningful change in third quarter estimates, maybe to the tune of going up to, you know, 46, 47% type level in wireless margin. currently the consensus expectation for fourth quarter on wireless is to have margins come in around 35, 36.
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that's a very low number. that would mean 1100 basis points hit a margin. what i would say is that unlike prior years in this fourth quarter at&t is going to be sharing what we call i-pain which is the iphone refresh pain with both sprint and verizon. they're not going to feel the brunt of the pain in our view. i think expectations are far too low on the wireless margins which should result in eps numbers moving meaningful higher through the year. >> that's a new one. i-pain. i like that. >> a good one. >> thanks so much. >> thank you. >> in the meantime let's send it over to brian sullivan for a quick market flash. >> this kind of plays into what you guys were just talking about. not exactly but similar. a truck leasing company talking about ryder shares higher today. the company beating the street second quarter earnings rising 17%. it also boosted its outlook for the year basically lowering the bottom end of guidance up by about a dime ryder saying higher pricing for used vehicles sales helping the quarter. keep in mind ryder lowered its
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outlook about a month ago so sort of beating on maybe a lowered outlook as well but got a little stronger pricing from used vehicle sales. fleet sales for the truck leasing company and that stock is up today about 8%. still down 33% year to date but kind of a similar story to u.p.s. in terms of the logistics. i know we're all about logistics. i just thought i'd throw it out there. back to you. >> thank you very much. we are just now three short tantalizing days away from the opening ceremony of the 2012 summer olympics as you'll be aware. up next we'll hear from the man behind uk's leading armt operates a baa to see how heathrow is now handling the record levels of passengers with security concerns and much more ahead of the big day. stay with us. ♪ [ male announcer ] this is our beach. ♪ this is our pool. ♪
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the opening ceremony of the olympics is on friday and millions of people are going to travel through heathrow airport to get to the highly anticipated 2012 games. we go live to london where she's been speaking to the man in charge of heathrow airport. hello, kelly. >> simon, hi. so five years of planning. oo staffers dedicated to nothing but preparation for the olympic games. we spoke with ba ceo collin matthews who gave us the first glimpse from their new perch at heathrow airport and was asked with just days away how are they
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coping with the influx of passengers for the olympic games? >> i know we've got great plans in place. i know we've been rehearsing. we've been practicin d after day. 150 rehearsals this year in every single area you can imagine. the whole of london transport system has additional stress on it so i won't say that i'm relaxed. we're absolutely keyed up on the front of our seats making -- to make sure the experience is a good one and so far so good. >> pressure is certainly on the official airport simon both for the games and for the paralympics games the end of the month. he talked a little bit about the challenges of having to move all these canoes and wheelchairs through the airport. all of this isn't cheap. heathrow actually says that they expect this is going to be a money loser for them but they hope the longer term reputational benefit pays off. if that is to be the case they better make sure things go smoothly on august 13th. that's expected to be the day
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with the biggest number of travelers because it is the last day of the games when a lot of people are actually going to be leaving the airport and in order to handle all of those travelers heathrow is actually going to be processing baggage and checking people in from the olympic village itself. that's one of the many investments and innovations the company is making. and beyond the olympics, what they're trying to do is also insulate themselves from europe's debt crisis and the recession in the uk. collin matthews says one of the things helping with that is actually growth in long-term business travel to key emerging markets. >> heathrow is a good barometer of global economic activity because if there is growth happening in china or growth happening in india, then business people want to go there. so unlike other airports which are more dependent on short haul traffic or domestic traffic heathrow in particular does give us an indication of global activity. there are parts of the globe that are enduring and doing
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well. >> apparently he is still finding some parts, simon, especially if you look at china, india, and south africa. >> so are you excited, kelly? >> you know, i have to say in spite of myself i'm getting excited. i was out at heathrow speaking with him. you can see all of the athletes coming in and out. i was actually down by the thames along part of the olympic village the other day where you can see the cable cars that have been put up to cross the river taking people from one site to the other. it's really pretty cool. you should be over for it. it is sunny out. hopefully the weather will stay nice too. >> let's hope so. kelly in london for the moment. i know we'll see a lot more of you. thank you very much. >> it's sticking with the london theme. we should note the countdown to the summer olympics is in its final stages only three days to go as simon said until the opening ceremony. nbc's full coverage begins this friday live from london where we'll be broadcasting live as well. you would not believe who goes to the olympics.
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very special guests. surprises as well. >> is mitt romney there for the olympics? >> he is going to be in europe. >> i've taken the liberty of printing off the ten-day forecast for weather in london. >> yes. >> would you like it? >> very thoughtful, simon. >> actually better than you might think. >> 4% chance of rain on friday though it is nice today. >> this is for the opening ceremony that will include pigs and sheep. i correct myself. cows and sheep. >> i know it was a 50% chance yesterday for friday. and they've lowered it to 40%. hopefully by friday we actually have a relatively dry day. we'll see. >> all right. coming up we've got an exclusive interview with jarden executive chairman martin franklin on everything from the consumer company's record second quarter earnings to burger king's setback into the public markets. stay tuned. accolade overdrive.
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>> mildly encouraged. we're actually quietly going through the longest period of manufacturing contraction since they've been keeping the statistics in china. that is nothing to be encouraged about. but this hsbc flash pmi is giving you an indication for july that we've probably turned a corner. i would say that the data we also had last and the week before indicate two things. one rkts they are stimulating this economy. there will be a benefit. it is not going to happen overnight and will not be one that says wholesale buying of mining and coal producers is something you should go out and do. what it does mean is the rest of the world can feel a littleit better for those people that are the bears on china. these were better than expected numbers and on the day when we also got pmis out of europe that were awful, much weaker than expected on manufacturing i think it is interesting people are focused on the china numbers as being decent and it's holding markets up here. >> with that said, tim, i want to ask you about earnings
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yesterday after the bell. a bead on the earnings as well as the revenue line. the stock is up 10.5% in today's session. is this the sort of stock that you want to invest in given what you believe china has turned the corner so what held the stock back before were concerns about china and of course just the whole sort of accounting concern that was brought up by oriental education? >> right. the numbers first of all not only beat significantly but their guidance was much better on revenue. their outlook is very good. these guys are growing a lot faster than google whose only growth really came out of the mmi acquisition. when i look at buying the chinese consumer, you know, it's not like buying the brazilian consum consumer. this is how i want exposure. first of all this company is mostly owned by foreigners. when you've had this corporate governance the stock was heavily sold and shorted into these numbers in addition to the s.e.c. investigations and the investigations into the structures that hold these companies so i think it's a great hold here and i think it
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is a company that is truly delivering top line growth. this is why people want to own china. and i think at the end of the day people have become overly negative and you can see what happens with a name like this which really is to me a world class company and a company that will do more business outside of china going forward. >> interesting. tim, thank you very much. tim seymour there. catch more global trades from tim every week night of course on "fast money" and tuesdays right here on "squawk on the street." >> let's get another market flash and send it over to brian sullivan at hq. >> ugly day for web md. maybe it needs a checkup. stock down 17.5%. they lowered their guidance for the full year and revenues as well as basically saying they're going to curb their marketing spending to deal with patent expirations and greater than expected delays in some new product rollouts. you'll forgive me for reading here because the numbers are dramatic. a full-year loss of 12 to 23 million dollars which is down from an expected profit of about three to 19.
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let me reiterate. the company had seen profit of three to 19 million and now sees a loss of 12 to 23.5 million bucks. that is one of the biggest guidance cuts i can remember seeing in a long, long time. the stock is down 18% reflecting that. it is now down 58% of the past 12 months, guys. web md, tough day, tough year. tough quarter. tough numbers. tough love from the flash desk. back to you. >> all right. carl icon certainly can't be happy with that as a major stakeholder. >> the dow is close to a triple digit loss. if we do that today that is three straight triple digit losses. we haven't done that since september. >> really. >> of 2011. >> however, given the bad news coming out of europe i think the market has actually held up quite well. i know it's down but the recovery we had yesterday is potentially significant. you know? with yields in spain where they are think of what would have happened a year ago if you have a five-year of spain where it is. >> always look on the bright
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side. >> don't characterize -- that's not fair. >> i just wanted to throw in the monty python reference. >> okay. ready for london aren't you? >> yes. >> wow. when we come back an exclusive interview with jarden's executive chairman martin franklin on everything from the consumers to the consumer to burger king. step back into the public markets. back in a moment. looking for a better place to put your cash? here's one you may not have thought of -- fidelity. now you don't have to go to a bank to get the things you want from a bank, like no-fee atms, all over the world. free checkwriting and mobile deposits. now depositing a check is as easy as taking a picture. free online bill payments. a highly acclaimed credit card with 2% cash back into your fidelity account. open a fidelity cash management account today and discover another reason serious investors are choosing fidelity.
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about an hour into trading this morning some of the stories we're squawking about 7:31 on the west coast. 10:31 on wall street. shares of under arm our jumping 11% with new all-time highs. the athletic apparel maker posting better than expected quarterly earnings raising the full year forecast. cisco today's biggest loser falling almost 5% and the vix rising 4% this morning back above 19. >> let's get more on the markets now and bring in the managing director and chief investment officer at strategic financial group at the cme right now. lincoln, great to speak with you. >> good to see you melissa. >> yesterday we had a market turn-around and actually inversion on the spanish yield
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curve and today the markets are relatively tempered in their reaction. are you stringing this together? you know, taking it as the market is becoming more resilient to all this bad news? are you more optimistic? >> it's interesting, melissa. the last time we had these earnings revisions and poor revenue numbers was in q2 of 2009 the market also reacting slightly more positively to those kinds of numbers so we've seen this historically before particularly in the near term reaction. i am surprised, however, at the continued disparity between ten year treasury yields and the price of the s&p 500. something's got to give there. the gap there is way too big. >> what do you mean by the gap? what exactly has to -- that would imply that either equity prices have to come down to meet treasuries or vice versa. >> i think perhaps even both. you could see a scenario not unlike the scenario we saw over the course of the last six months where bond prices rose
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and equity prices rose. you could see a sell off in both fixed income and equity prices to renormalize that spread. >> so as an investor what do you do with that information if you're saying that both can happen and maybe you do have an equity sell off and bond sell off? where do you go? >> yeah. well, i think you have to take some money to the sidelines from your fixed income portfolios and you have to remain very defensive and yield oriented in your equity allocations. that continues to mean utilities, consumer staples, and perhaps some of the regional banking plays here in the united states. >> lincoln, i can understand why the equity market might sell off. why would the bond market sell off? do you look at where we've been recently and see big evidence of that? pent up desire to sell? >> i don't -- yeah. no. it's a good question and in all reality, simon, i don't see big evidence of that. one, because of the scarcity of, quote-unquote, safe assets in
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the world and, secondly, because of the kind of stress we're under thanks to both the european situation and the slowdown that is very much evidenced in the overnight pmis we're probably not going to get that sell off in fixed income. it will come and investors should just be aware that it's a blip on the radar screen even if it's very far to the bottom or very far to the top. >> so it will eventually come. it'll be a blip on the radar screen. air still recommending that investors lighten up their fixed income at this point. >> i don't think there is, you know, what is your upside, melissa? the ten, 15 basis points or maybe 30%, 30 basis points of more profit for a potential downside of five, six, 10%. the risk reward there is just not a good place for us to be putting assets is all. >> lincoln ellis out of the cme. >> thanks, melissa. high temperatures and a major summer drought are putting the squeeze on farmers so is it
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too late for the corn crop? the state of iowa is hosting its farm bureau economic summit today where the drought in the midwest of course is the central topic. cnbc's jane wells is live at the summit and she has the latest for us. jane? >> reporter: hi, david. you know, well, corn, wheat, soy prices all coming down a little bit because we're finally getting a little rain. is it enough? dupont, the maker of pioneer seeds, reported double digit growth in ag sales and operating income this morning. a real bright spot for the company although the stock is down last i checked because it lowered guidance but ag very strong. the gmo seeds are credited with keeping a bad situation from becoming a complete disaster though ben bader a new generation farmer, someone they really have, says here in iowa the largest corn producing state, it's still pretty bad. >> i think our lanaverage last r was 190 bushel per acre and if
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we get rains maybe 140 to 150. if not we'll be a hundred or south of a hundred. >> ouch. >> yeah. a little bit of a pinch right now. >> now he has crop insurance to cover his costs but the usda is still predicting 146 bushels an acre nationally. that is slightly less than last year. that number is expected to go down. so with all this uncertainty what does that mean for equipment sales? >> when you see the type of drought that we're seeing right now, it's hold the cash. make sure you have working capital, stay liquid. >> analysts are divided about what this means for deer. deer is sold out right now of its tractors and combines. bank of america thinks the drought could be good for deer as it will extend the ag cycle though it says that could change if corn yields drop below 130 bushels an acre because farmers just won't have any money. william blair predicts many
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farmers will delay purchases until next year and dealers in hard hit areas say sales could drop as much as 20%. blair has lowered the 2013 deere estimates though it still calls it an attractive, long-term investment. guys, on power lunch we'll have an interview with the agriculture secretary tom bilsak. back to you. >> that is tough stuff to watch. listening to the amount of money he is expecting to get per bushel. that is unbelievable. jane wells joining us from iowa thank you so much. diversified consumer products company jarden posting a quarterly profit that did beat expectations. david will sit down with the executive chairman martin franklin for an exclusive on the back of those earnings when we come right back. [ female announcer ] e-trade was founded on the simple belief
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that i forget how to put gas in my car. ♪ jarden reporting before the bell beat expectations and i'm joined by the chairman martin franklin. he built this company into the diversified consumer products company it is today. he also serves on the board of burger king worldwide. jarden may not be a name people
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know but they know mr. coffee and sunbeam and coleman and rolgs and so many of your other brands. >> yes. >> martin, there has been concern in the u.s. economy really over the last few weeks particularly given the retail sales numbers we saw last week. bring me right up to date. you had good numbers for the quarter. what are you seeing though from the willingness of the willingness of the american consumer to spend money? >> i think we saw a general slowdown probably starting in june at some point. for us we've thankfully been fairly protected, market leaders in most of our brands. tens and seconds and thirds in the markets tend to be affected more. overall we've seen a bit of a slowdown. >> that took place in the june period? >> yes. >> so toward -- obviously the very end of the quarter you reported. >> yes. >> what are you expectations then? is it continuing? >> yeah. well, for us, again, again, a little more protective but more vulnerable to the seasonal
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weather. weather patents for us have been okay so far in the summer. you've got a dry season at the moment so we're keeping an eye on that but overall not too bad. i think for the overall consumer you're going into an election year. who knows what is going to happen? >> people would have anticipated especially given gasoline prices have moved down that the consumer might be in a better position than they were even in the spring although then of course we did see extraordinarily good weather that may have brought forward some of the spending. >> yeah. look, i think overall the consumer is relatively healthy. when i say relatively healthy i'm talking about relative to other parts of world particularly europe. so, you know, it's okay. is it the same level of growth that we saw in the first half? maybe not. but it's all right. it's not bad. >> it's not bad but it's interesting because as you say you are a leader in a lot of categories. you had organic growth for this report erd quarter, second quarter, 3.7%. when you start to see a little weakness on the consumer front. >> yes. >> do you pull back in terms of
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expenses? what is your approach when you're running obviously a consumer products company that covers a lot of different areas? >> it's interesting. if you look back to 2008, 2009 period where the market got really tough, we go on offense when, you know, you can take share in a down market, weaker consumer environment where your brands mean more to the consumer. if we could find the right type of investments at a time when other companies perhaps aren't investing as much in your product. so we actually go on offense during that period. >> you've always been aggressive when it comes to mergers and acquisitions. does that include that as well when you say being more aggressive? >> no. we're very selective with acquisitions. we've been very opportunistic in our approach to acquisitions. we'll continue to look at tuckins. we are looking at tuckins in particular international markets where we think there are opportunities for us to grow into new white spaces for our business. but overall if we make acquisitions it's purely opportunistic not in any particular --
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>> not just do you have insight into the american consumer but you source a lot of your goods from china. so i'd love to get your sense as to what you're seeing there whether it be wage inflation and also your sense in terms of what you're seeing in the country itself. >> you know, what's interesting is in china in the last few years we've seen sequential growth in payrolls. fairly substantial. last year i think somewhere between 18 and 20% wage inflation. this year much more modest. china's pulled back. and why? unemployment levels there are higher. they're a little concerned. gdp growth has slowed down. so that momentum has seemed to have come to a halt. >> will that help your margins conceivably? >> it has helped our margins. you know, there is a lag effect to it having any real impact but at the moment commodity prices have held relatively stable. shipping costs have held relatively stable. and wage inflation has been a little more modest. so overall that helps. >> so that will help even if
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there is potential slowdown in consumer spending. can they sort of balance -- >> should be. it's always a balancing act. again, you're also reacting to pricing against your inputs and these things could always change. but at the moment what we like to see is a relatively stable input and that's what's going on at the moment. >> why am i holding this shoe? >> you're holding the shoe because this is the new one from zoot, triathlon shoe, very light, seven ounces. they'll be running with it in the triathlon in the olympics. and we're just using this as an example of new product coming out all the time. >> very light. we should mention you are a great try athlete. you'll be competing next here in the new york triathlon. >> this year august 11th. >> yes. >> a great triathlete i don't know. >> come on. 150 miles through the desert. the man has no body fat. martin franklin as always appreciate it. >> thank you, david. >> you're welcome.
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back to you guys. >> thank you very much. it is a huge night tonight for earnings as the most important stock for this market apple unveils results after the bell. should you buy now on the clues on iphone sales that are within at&t's results this morning? we'll have analysis shortly. but first rick santelli working on the third hour of "squawk on the street." hi, rick. >> hi, simon. well, you know, today we'll be talking about a topic that we've talked about before. teaser rates. not the kind of teaser rates that really why embedded in the entire sub prime meltdown and the adjustable rate mortgage meltdown but the teaser rates of federal government and the treasury. not only in this country but in others. is it a good thing? well, maybe it just perpetuates trying to make things the way they were kind of the humty dumpedy analogy. no matter what your perspective i'll be talking directly to you about it and maybe you'll change it after we get done top of the hour. [ male announcer ] summer is here. and so too is the summer event.
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rate cuts in china may be working. fresh rates show the contraction is slowing. where does the slowdown in china
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leave business thaes have invested heavily there not least of course the big hotel chains? starwood reportsth, all after marriott shocked investors recently by warning of slower earnings growth due to what's happening in india but more importantly overcapacity in china. it's one of the major talking points of the travel convention in boston. ted builds his 30-year expanding big hotel brands in asia-pacific. >> i think most of the chain brand hotel companies are betting two-thirds of their growth all in china, right. that's exciting, it's also risky. i think china will slow down a little bit just because of its own scale, the economy has grown so large. >> does that mean overcapacity, is that what you're saying to me? >> i think there are many cities who will grow quickly over capacity. outside of the large cities, the small cities simply cannot support the development costs
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they're putting into it. >> another takeaway from boston is how all the airlines are out in force spending big money on convention stands in order to sign deals with the convention's 1,400 buyers of business travel. lot of airline innovation centers on reconfiguring cabins, american airlines becoming the first u.s. airline to promise seats between new york and california. virgin america's ceo david curb stressing wifi, light cable news and touting new staff uniforms from august 8. >> i think the key thing is going to be, again, the customer focused innovation, what goes in the cabin that we've been focused as an industry on the outside of the cabin, on range of aircraft, on fuel efficiency. now we're very much focused on the inside of the cabin, so live tv, internet and other things and i think people, again, they don't want to be cut off from the outside world, just because they're on an airplane for five
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or sikz hours. >> if you're angry about being nickelled and dimed with extra baggage fees, it looks like that is here to say. airline ceos say it's the free market moving away from the era of fixed fares, and an industry they say that is now pricing more like any other american industry. you pay for what you get, whether that's baggage or speedy boarding, i know it's controversial, but that's what they're saying, going nowhere. >> paying for every little thing, you go with four people, two kids, whatever it is, you know, okay, it's one wants that and i got to pay for the movie. >> would you rather have it wrapped up in one large fare? >> i would. >> even though it's less transparent. >> you don't want to know. >> pay it once and get what you want. i'm sure other people feel differently. >> it's the flipside of walmart in a way having driven down costs of air fares. all extras have to be paid for. >> there are airlines that don't charge for bags, jetblue being one of them, they are known as a discount airline but they don't necessarily always have the lowest fees.
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i just talked to ceo dave barger last week and he was talking about competing on service and competing on what you get, like not charging for that extra bag or for a bag, period, to are that matter. >> what is interesting, kayak trialed technology you went on, it would show you instantly at the headline what the total cost of what you were ordering was and they couldn't run it as a technology because everybody thought their prices were higher. they just had total transparency on what was going on and people were like whoa. >> they don't want to know. >> then they get to the end and find they're being charged for it anyway. >> right, even for the television, if you're getting charged $9.99, that's annoying. >> good stuff, simon. >> we're not worth $9.99? >> sorry, didn't realize what i was saying. >> of course we're worth $9.99. tweet time, former yahoo! ceo scott thompson left the company following a flap over misstated credentials on his resume. as of monday the ousted ceo is running a smaller private rival to amazon called shoprunner, an
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online shopping startup. that brings us to this morning's "squawk on the tweet." what exactly on scott thompson's resume caught the eye of his new company? tweet us. mamama
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remember scott thompson, the yahoo! ceo who left the flap over his misstated credentials on his resume? now he's running shoprunner, an online shopping startup. this morning, what exactly on his resume caught the eye of this new company? "he's retroactively gotten a computer science degree." jared writes "he left his resume blank so there could be no embellishment scandal." john writes "will work for educational credits." >> internship. >> you're watching cisco.
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>> cisco shares are down by more than 4.5% along with juniper and no coincidence this is on the heels where we're announcing yesterday after the close of the buy a virtualization company for a little bit more than $1 billion, seen as a threat to cisco as well as juniper in this space. interestingly yesterday had worse than expected earnings, although they came out six days ago and said they will meet expectations, but the stock has turned around now and higher as the other two competitors are trading lower. >> what's coming up tonight? >> all about netflix and apple, two widely watched stocks. the apple conference call going on, we'll be trading that call live and of course we're going to be deciphering netflix's call results, the conference isn't until 6:00 and we have the analyst who initiated jcpenney at an outperform, interesting against the crowd call. >> that stock has been moving up
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lately, last couple of days, at 22 now from 18 the other day, a big percentage. >> that oppenheimer analyst will join us. >> somebody jokes about it being a 15-bagger, i don't know, that may come back to haunt him. we haven't had you around for the last european closes, you were covering kayak and then to the boston conference, it will be good to have you here. >> i hope you enjoy the london olympics, stiff upper lip, stay calm and carry on. >> nice? virtual? >> probably. >> we'll see you guys a little bit layer. here's what you might have missed earlier on this morning. >> welcome to hour three of strt str "squawk on the street." >> i think the ecb will stop in to stop a banking crisis but i think we'll have a recession in spain, greece, portugal for years to come. >> i think washington really holds the key.
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europe i think is going to remain a mess. we can work our way through it if we get relief in washington. >> u.p.s. numbers are out and worse than expected, the stock is down by about $2.50. >> they want to say hey, it's the politicians. we could do well otherwise. that's a subtle theme through all of the ceos i talked to, hey washington, europe, get it together and we can roar here but they're not getting it together. we're in a rare era where nothing seems to have substance. this is investment. there aren't many companies that say i want to you invest in apple other than at&t, i think that's a good investment, verizon. >> the opening bell as the dow is at its worst two days since june 21st. >> third quarter is typically low volume quarter, we think about the fourth quarter iphone
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refresh which is really the quarter all eyes are on. >> good tuesday morning. welcome to the third hour of "squawk on the street. "the dous dow getting close to the triple digit loss, third in a row, we have not three back-to-back-to-back since september of last year, came off of the levels currently down 84 on the dow, s&p is down almost 9 and the nasdaq down almost 13. cisco and lex mark two of the biggest loser, cisco announcing 1,200 jobs announcement late yes. baidu posting 10% after posting a 70% surge in second quarter earnings. apple's usually the darling of the street, getting usually tame expectations from analysts for its earnings. we'll get a preview and see if
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you should be cautious, too. as the drought in the midwest shows no signs of improving and grain prices sky rocket we'll talk to kansas senator jerry moran of how his state is being affected. less than 30 minutes from the european close, markets overseas paring their losses. we'll find out how europe closes out the trading day. has your search for your own private island been a tough one? don't worry, we found some selling at a discount. how you can buy an island and why they are so cheap, coming up in the next hour. first apple, wall street's expectations not too high. jon forte is live in san jose with more on what may be the most hotly debated quarter for apple in some time. would you agree? >> i would definitely agree with that. those of us who follow apple's earnings closely seen an
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interesting dynamic between self-side analysts and armchair analysts who see it differently. self-siders usually get it long, lowballing and armchair guys tend to get it right. this quarter the camps are far apart. wall street analysts ho-hum quarter around apple, consensus is 37.2 billion in revenue, less than 10% above apple's guidance. wait a minute, say the armchair guys, remember last year that disappointing october quarter, apple beat guidance by 13%, a couple of those analysts say apple will sell more than 30 million iphones, about 20 million ipads and do closer to 40 billion in revenue. i talked to one of the armchair guys, andy zachy about the numbers, says apple tends to beat guidance by 13% to 18% and recently as much as 25%. yes apple lowballs but in a consistent way, and so far by my
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read the armchair guys are more often right not on the exact numbers but on the trend and at&t's numbers suggest a lot of wall street analysts may be too pessimistic on iphone, when you combine at&t and verizon, their iphone numbers were down about 15%. if the rest of the world was down about the same, you're just a hair under 30 million iphones, and you know, for the rest of the world to be down that much especially china it would be a steep drop in growth. >> thanks for setting that table for us, jon. cha wu is the senior technology analyst, always good to talk to you, good morning. >> good morning, carl, how are you doing? >> not bad. reading your note here you think that it should not come as a surprise to investors tonight there might be a little bit of lightness in the iphone ahead of the refresh. what's the first number ir'going to look for and what do you expect? >> i think people are going to really pay attention, obviously
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to the iphone number itself, i think the other area obviously, you know, the earnings, and then last but not least the margins, in terms of the product mix and also how the component environment favored them. >> this morning, at&t, iphone activations down 14%, quarter on quarter, that wasn't as bad as some thought. is there any -- do you believe there is some upside risk to your relatively tame outlook? >> yeah, i mean, i wouldn't call it risk. i would say that, yeah, there's potential for upside surprise, that would definitely be a positive but on the flipside, people remember last september, a lot of the not just sell side but the armchair analysts were severely off by a mile. so i think you have to take into account that there is a product pause ahead of this major refresh. >> and you point out in your note, you say there aperiods to
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be an understanding among investors you talk to that the next two quarters are going to be choppy no matter where the numbers come in exactly, right? >> exactly. the next two quarters almost don't matter. it's more about december, march and june, the quarters after, with this sixth generation iphone ramp. in the near term frankly, i mean people are going to be paying attention to these numbers but they really don't matter in the big picture. >> yes. let's talk about the stock itself, 780, i'm not sure where that falls in the spectrum of price targets on the street. there are still some that have four numbers in them. has your target gone up or down in recent months? >> we've taken it up, so 780 we think is a pretty good upside from here. we also try to be responsible. we don't want to be reckless, right, so we think this is a reasonable price target. it's based on roughly a 12 multiple. we also take into account the cash on their balance sheet. >> there's been a lot of discussion about china, in terms of this quarter, discussion about the relatively late ipad
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launch, people thought it was going to happen earlier in the year but also, sha, a lot of telecom companies, chinese companies are lowering their guidance, less infrastructure buildout potentially. is there risk to the company in china where obviously the potential for growth, the likelihood of a whole new generation of subscribers through china mobile and so forth is obviously what's keeping a lot of investors interested. >> yeah, well, we still look at china as a huge opportunity. that's a fairly untapped market. as you mentioned china mobile has yet to be signed. they have 650 million subs so we still see that as a big callous. we are in a tough environment so it's better to be cautious than overly bullish. we think that's to be conservative we think it's a better stance to take at this point. >> i like the way you put it here, you believe apple will revert to its vintage
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conservative guidance and people who don't follow the name that closely should be aware that they are notorious for issuing guidance that seems really cautious. >> yeah, that's correct. so yes, they tend to be conservative with their guidance, but the other thing that's giving us more caution, frankly, is when we talk to the suppliers in asia, there is a reduction in the bill plans, particularly for iphones and we think for that reason they're going to be probably, there's more reason to be conservative this time. >> we'll see you in a few hours away. good to talk to you again. >> thanks for having us again. >> sha wu at sterne agee. a very crowded trade, gary, good morning. >> this has been on my mind for several weeks and i want to give credit to the "wall street journal," they did run a cover story on the high dividend ng stocks yesterday, it was a headline story but i was actually watching "squawk box" yesterday morning. let's play a clip, barry nap
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from barclays was on. listen to what barry knapp had to said yesterday morning. >> at 1301350 there's nothing to do other than to sit in the high dividend paying, you know, defensive sectors, and quite frankly, i think buying puts in front of the next few weeks is probably not a bad idea. >> now, i'm not trying to single out barry, every strategist, even the strategists on wall street who have negative views on the s&p, lower price targets, have been telling people for the last two years to buy high dividend paying stocks. obviously you know what i think about interest rates, carl, and where i think the ten-year is going. high dividend paying stocks has been a great place to be. 50% of the return, i've said this for years, historically in the equity markets has been dividends and distributions reinvested. when i told people that five years ago, nobody cared. when i told people that in 2000, nobody cared. the fact is this, i want to do a little role play. i want to do a little role play, this was a conversation i had last week with a friend of a friend who recently sold a very
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significant part of his business to private equity. what do you want to do with the money? well, i want to take no risk and i want to get a lot of income. do you have any idea what interest rates are these days? i do, but i think i can get return. i'm going to be putting my money in high dividend paying stocks, get 3.5, 4%, it's taxable but better than buying tax trade muni and certainly better than buying treasuries. here's the problem, everybody who has that type of objective right now owns these high dividend paying stocks and the problem is, when i ask this individual, what do you think is going to happen when the fed, because eventually the fed is going to hit at higher interest rates, not the rates are going to go up but even the simple hint of what it will be, what do you think will happen to the stocks? the stocks are buffered because we'll be able to sell those stocks before, and we know the names, verizon, at&t, altria, we know the names, kraft, what the problem is, is that you have to think about the incremental buyer. everybody who owns that strategy
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already owns these names. the idea you'll be able to get out of them and everybody says the same thing, carl, i'll be able to get out of them whenever the fed says they're going to raise rates. i'm telling you today those stocks will be down 20%, 25% on the first hint of interest rates going up because there are too many people that own them and everybody that's looking for income is already in that name and by the way, i said i don't want to single out barry knapp. jeremy siegel said the same thing this morning. >> sure. i'm totally with you gary. that clue, whenever it comes, is not happening any time soon unless -- if you listen to what the fed said about their current window, right? >> listen, you know what i think about things but i also remember 200in technology and i remember 2007. these things just don't end the way you think they're going to end and so on paper, there's no way interest rates are going up in my lifetime or your lifetime, but that's on paper. in reality, too many people own these high paying dividend
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stocks and they own them from what i hear for the wrong reason. they don't think there's any capital principal risk and that is scary. >> especially when we pay so much attention to at&t. >> sure. we check in with rick santelli with insight on the low rate environment. >> everything gary is talking about all fits quite well. as i was looking at yield curves today there's a lot of talk about yield curves starting inverting countries like spain and what does that mean when short rates start to move up in yield, down in price faster. we know what it means. it means a day of reckoning is coming, and we've had some discussions this morning on "squawk box" where, you know, so many very, very intelligent, right people can see the issues in europe clearly, we can see, they see band-aids and duct tape, they see the macguyver dynamic, central banks and euro crates and technocrats are
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trying to put every possible way together to keep the system going as it is, but when it comes to the u.s., it seems those communications break down. let's start with the obvious. on sale! treasuries on sale now! hurry while it lasts! post fourth of july sale, pre-fall sale, pre-winter sale, they're on sale! look at the yields, 22 basis points for a two-year. in switzerland they're negative yields all the way out to five years. does this mean as many think it does that, wow, they just love switzerland and the u.s., investors globally the chinese, the japanese, the british, all of us that are involved in buying treasuries, global investors they just think that our plan to fix the economy is so great they just want to give us more money. i don't think that's what it is. i think in a world where it's like a funnel and things have not gone well and as the funnel
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gets more narrow, investors are willing to hope, to bet double or nothing. you ever been with a gambler? just because he has a double or nothing strategy doesn't mean you want to jump on. in the end the past to least resistance when it comes to bureaucrats, whether in our country or europe who can't make decisions because they might not get elected, there's tough decisions that need to be made and think of ayn rand, people doing the grunt work seems they're the forsaking work. you can't put humpty dumpty back together in low interest rates, robbing the 92% of being employed that much longer to create revenue to help the people that need it. back to you. >> a lot of fans of that. thanks a lot. see you in a bit. a market flash from brian sullivan back at headquarters. >> lenox is an interesting story, here is a company whose
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stock is tanking even though they raised full-year earnings outlook because they trimmed their revenue outlook. you guys have talked about sales versus earnings, very different stuff, right? cash in sales, that is a pure number. lennox lowering revenue, raising eps. stock getting whacked. back to you. >> an amazing quarter to watch. when we come back senator jerry moran will talk about how the drought is hurting his home state of kansas. and why the super wealthy are dumping their private islands and how you can get your hands on one, we'll find out how much they're going for, after this short break. my volt is the best vehicle i've ever driven. i bought the car because of its efficiency. i bought the car because i could eliminate gas from my budget. i don't spend money on gasoline. it's been 4,000 miles since my last trip to the gas station. it's pretty great.
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♪ the countdown to the 2012 summ olympics is in the final stages, only three days to go until the opening ceremony. full coverage of the games on nbc and we'll be broadcasting live starting friday morning, got some special guests in store you don't want to miss it, it all begins this friday right here on "squawk on the street." when we come back, senator jerry moran is here with the latest on the drought situation in kansas
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rick santelli in chicago is talking to senator jerry moran and regulations and the drought. >> good morning, carl and well senator, senator moran, republican in kansas. only two topics i want to talk about today, senator. >> okay. >> one is agriculture and the other is about the resignation comment you made two weeks ago. the easier one, corn down 22 cents and new crop 7.62, soybeans down 50 cents. on the kansas side how much precipitation have you gotten and what is the feeling in kansas about the crop? >> i appreciate these questions about agriculture. agriculture has been a driving force, a positive aspect to our
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nation's economy, not so today based upon weather patterns for the last month we've had virtually no rainfall in kansas and the temperatures exceeded 100 degrees nearly every day. the mood is bleak and our attitude is very much affected by whether there's moisture and the predictions are virtually that nothing in the forecast that's very positive any time soon. >> no, when it rains in the chicagoland, the old saying, when it rainsen in lasalle street there's a big sell-off. the other story, about 12 days ago, you, senator, called for the resignation of the head of the cftc, gary gentzler and your reasons after parody group and mf global, it seems he's fallen asleep at the switch. do we need more regulators when
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these two issues are so glaring and nothing the regulators saw seemed to raise flags? this is reprehensible. do you still want to see will genslor's resignation and do you think this will catch on? >> i don't call for anyone's resignation without some thought and serious thought and in my view you said it very well, the cftc and its chairman, he need to provide the leadership in which the cftc is focused on the primary function of overseeing the futures markets and you have mf global followed by paradine and 0 for 3, suggests a change there and what you said is so present in my view of the cftc, chairman gensler has been all about implementation of dodd-frank to the absence of the primary core function of protecting consumers in the
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united states. we have not seen it and i'm the ranking republican on the committee that has the cftc's appropriation bill. it's always about more money and more employees for purposes of implementing dodd-frank, and i'm happy to have that discussion, but i want to make sure we've not walked away from what needs to be done to protect consumers in kansas and across the country. the evidence is they have. >> yes, and senator, we need beat cops. i understand that. capitalism needs beat cops, but you remember that car 10 or 15 years ago the hugo. seems the cftc reminds me of hugo. they didn't monday ta the nfa good enough. we were taking p.o. box numbers for client numbers, seems at the epicenter. if you take a hugo, not so good car and put great options on it, is that a wise idea? we're building on this regulatory platform and it's obviously flawed way down at the bottom of the food chain, senator.
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do we need a completely different system? >> well, before you take and add more responsibilities to the cftc, we need to make certain they can do the basics and in my view chairman gensler has been focused on the new responsibilities to the exclusion of the old responsibilities and i would expect every response to what i say would be by chairman gensler is we need more resources i remind our viewers we have doubled the resources, the dollars that go to cftc, added hundreds of new employees and to me it's a matter of priority and focus and approach, not a matter of just how many dollars we have. >> absolutely. you know what? facebook is free. why don't they have the regulators friend all the banks? how easy would that be to see if the money's really there. thanks, senator. carl, back to you. >> thank you. >> thank you very much, rick santelli. few minutes left in europe's trading day. we'll have the close and what that means for the afternoon session after a short break.
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a few seconds before the close in europe. greenhorn capitol, year-to-date net return of 3.4%, new positions positions in cigna and coventry, closed positions in dell and
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best buy and large positions in apple, gm, gold, which we knew to some degree, marvell technology and seagate. in the meantime a look at how europe will close and here are the bells. >> the european markets are closing now. [ bell ringing ] >> it's a scary time for many people in europe. look at spain, look at italy and portugal and the way the stock markets have fall an way. on the u.s. session yesterday we cut our losses half way through that session. we halved the losses. that didn't happen in europe, they have continued to fall. what is important is to just note where we are as we reach fresh record lows on italian stocks how the dow jones industrial average for the year now is still in positive territory, overall european equities for the eurozone are down 22% but you have these sharp losses, look at spain for the year now is down 30% so the equity markets continue to crumble, in spain and in italy. there are two things that we
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should watch, obviously what is going on there and also what is happening in greece. moody's note overnight, read the moody's note, it really sets out why they are putting the likes of germany and indeed the netherlands and luxembourg on negative watch. these are pictures of what's happened today in greece in particular, where they have spoken about a contraction of 2% of gdp, this year. now the brinksmanship begins again on getting greece out of the eurozone. the troika arrives today. they haven't done enough spending cuts. will the rest of europe give them a bridging loan of 2.3 billion euros at the end of the through to tide them through, will the germans give greeks more money, when it is thre threatening their triple "a" status. for them the likelihood of a greek exit is low. why moody's is downgrading the netherlands and luxembourg or rather putting them on to
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negative watch is because of the way europe is approaching the greek crisis and the spanish crisis, they say it is gradualist and therefore the magnitude of the shock will increase through the summer and more money will have to come from the core nations to just keep a lid on the situation through the bailout funds. let's go to spain and see what is happening there, again, more protests on the streets of spain today of that 65 million euros additional cut in spending that they are having there. the basic truth about spain, of course, is that they are losing the fight to keep the confidence of the markets. we saw it at the end of last week and we see it at large again today the way in which you have an inversion of the yield curve. what do i mean by that? it costs more for the spanish government to lend at the five-year than the ten-year. the implication for that, and look at this, coming up to almost 7% for the two-year. the implication is for the market fears of restructures or a rising fear of that, that people won't get their money back. it's true also almost in italy,
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have a look at what is happening there, and you'll see the way in which those italian yields, check out the difference between the five-year and the ten-year. the five-year is almost higher than the ten-year. that's about general contagion. it is to do with greece but generally, carl, it's about a loss of confidence that is sweeping through. today the french said maybe the ecb would react, maybe the ecb would buy bonds but more likely coming back to the idea that you raise the amount of money that's in that bailout fund, which, in turn, hits the ratings of the likes of germany, luxembourg and the netherlands. >> even though you said a greek exit is not a moody's big case. but increasing up from very low. courtney reagan here on the floor of the nyse, the dow down 78. >> exactly, looks like we're at the lows of the session, all major sectors lower. telecom the worst performer of the group, looking at the s&p major sectors pulled down by at&t, and some of its details in
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that earnings report, noting that the smartphone sales slowed. there were some caveats you've been discussing that, too, if you look at the industrials, it's the second worst performer but ryder, a big standout, it's a trucking company, they reported very strong earnings, better than expected revenue, also upping its that company having its best days in three years, almost up 9%, or at least up as much as 9% at one point in the session and help for housing today, a couple of positive reports, zillow saying home prices increased for the second quarter in a row for the first time since 2007 and the fifth time in six months we've seen the index rise and barclays notes that housing recovery has broadened out a little bit. we've got some more housing reports due out later in this week so we're going to be following that pretty closely, as it has been a bright spot in recent months, so far this summer. but maybe all of those home builders or home buyers are not
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putting in whirlpool appliances even though the company blamed europe and some currency effects for its disappointing earnings, to say the least, missing again by nine cents, having its worst day this year, down as much as 8.7%. carl back to you. >> that's been a tough one to watch. thank you, courtney. gary kominsky is up next. >> we'll talk about trends. >> keep me guessing. >> on the theme of things i've been thinking about several weeks, i'm here by etf, herb greenberg's desk. the morning convergence had an interesting read, five things you should think about if you're the cfo of a company, it's a good read if you are a cfo, you want to check it out but in there, there was something that's been on my mind for some time as well, the idea of how important etfs are for individual stocks. we're going through earnings season, obviously the impact of
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a company's reported earnings impacted that company on a specific day in the day's trading but longer term investing, whether or not that company's security is in an etf is probably the single most important thing. he's got some interesting numbers in here. $450 billion has come out of actively managed net long mutual funds over the last five years. the typical company has about an etf exposure between 3% and 10%, that is between 3% and 10% of the shares outstanding are in those actively managed or passive etfs. those are the areas of asset management that are growing. the bottom line, the point, it's almost as important or more important to figure out if a company or a stock that you own is in an etf, and if that etf is getting flows because the likelihood of that stock's performance over the next three to five years is going to be much more about whether or not it's in the right etf, almost as much so if in fact they're
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delivering the earnings and this was a great point if you're a cfo, you better pay attention, and before i go, carl, speaking of stocks, quietly somebody pointed out to me, guess what stock is making a post-ipo new all-time high, recently became public this morning. >> 52-week high or all-time high? >> new all-time high because it's only been public for several months. take a guess. we spoke about it down at the floor a couple times. >> tell me. >> carlile, cg. look at carlyle, boom, traded around the flat line 22 level for some time, dipped down with the market. look at that, that's investing. it's not about necessarily the day or the weak, they priced that for investors and seems to be working out >> as opposed to facebook at 29, although it is up today. >> exactly. i'll see you at the end of the show. >> for some more on the worries in europe today and the global
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markets we bring in bob bauer from principal global investors, chief economist. good to talk to you. >> good morning, carl, how are you? >> good, although some of these data points are worrisome. i want to get your take on richmond, which obviously was way below expectations, the lowest in several years, some are saying it's implying zero percent growth in the second half. i know it's regional but these add up over time. >> that's true. i think the empire was a nice rise earlier, the philly fed was flat to a little bit lower. we've got some variety in the regional fed indices. the market number came out this morning was a little tick down but still positive. i think the pmis are really responding to a bigger inventory build in the second quarter than we kind of expected, and so that's where manufacturing is slowing some. >> you knew it would be slow but thought there might be a pickup
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in the year. >> yes. >> talk to us about the degree of days appointment. >> we've green a little more cautious. we thought the if, half would be weak as long ago as december but we thought there would be tail winds in the second half, reduced our forecast for two or three quarters second half growth to 2, 2.75. you know the housing clearly has bottomed. manufacturing is still coming back to the u.s., the airbus was the latest anecdotal number, the state and -- state revenue is rising, so i think the spending cuts and layoffs from the states ought to fade by middle of the quarter, global central banks are easing, so i think there will be some tailwinds, not very strong, but some for the u.s. >> yeah, and then we got some headwinds as well, i saw a report today that suggested that this drought depending on how bad it is could end up taking as much as a quarter point off of gdp. do you think that's materially
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significa significant? >> well it's certainly one of the headwinds and part of the reason we've become more cautious. gas prices are not going down and the mandates for ethanol with oil with high corn price also raise the price of gasoline even if oil is flat to down a little bit. in addition rementioned the inventory build in the second quarter and acrimony about the fiscal cliff is starting, all of the reasons where we've grown more cautious. >> sounds like some of thegid an guidance we're getting from the big companies out there. >> thank you. we get a market flash from brian sullivan. >> i want to dig more on the einhorn letter. dell and best buy both gone, david einhorn selling out of both of these positions. what they're saying about dell they thought there'd be more growth in the non-pc business
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and said there wasn't and the deterioration of the pc business was worse than expected. what i think is really interesting on best buy, carl, is you know we talk about this idea of showrooming, going into best buy, looking around, and buying on amazon. einhorn's team says that's not true. surveys show, and i'm going to wrap in a second but i can't read a 17-page, just give me ten seconds, basically that people are not showrooming, that the pricing is comparable. they said it's rather a deterioration in the chinese business, that's a big part of the story. i didn't know they had a chinese business. >> interesting. and i think both of those positions closed at a loss as far as we can tell. >> in his third biggest long is gm. >> gm. >> which is only down, a new low every day. >> interesting. the letter is worth reading, fivees, is a little dense. markets down 110, triple digits of course and as we said at the top of the hour we have nod had three back-to-back, triple-digit losses on the dow all year long.
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in fact go back to september 6th. we'll check in with art cashin after the break and get his take in a moment. sometimes investing opportunities are hard to spot. you have to dig a little. fidelity's etf market tracker shows you the big picture on how different asset classes are performing, and it lets you go in for a closer look at areas within a class or sector that may be bucking a larger trend. i'm stephen hett of fidelity investments. the etf market tracker is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea.
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welcome back. it's a big earnings day and we've got it covered on the halftime report. hours to go before apple's big numbers, one of the street's best analysts will tell you how to trade it ahead of that. trouble with the top line is the quarter's theme, a look at
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which companies had the biggest revenue misses and who could be next. despite being on a tear, why one analyst says sell netflix before tonight's report. carl, see you in about 15. art cashin, market insight, lows down 122 in the dow, spanish yields up 763, the euro at 1.20 and six, so much for turnaround tuesday. >> looks like turn on them tuesday. we're very close to retesting yesterday's lows and that will be important. there's an area in the s&p between 1334 and 1337 and if we go through that, then there will be an awful lot of rethink, we could have a little bit of a problem here. you've got things going badly still in europe and as you and i discussed off camera, the geopolitical picture is much worse and this none of that seems to be priced in.
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>> we talked during the break about syria, iran, aircraft carriers in certain waters. is there even room for the market to worry about that, at this point? >> well, i'm truly amazed that they shrug it off. i think syria is a focus point in the middle east, those chemical weapons, russia is afraid they'll go to the chechen rebels, israel afraid they'll go to hezbollah. if somebody will topple somebody might make an overt and that's not priced in. if you have a scramble for the dollar, we could hit a very thin and vulnerable market here. >> in your notes you talk about bernanke. obviously the market has had a trigger, light trigger sensitivity to any suggestion of kiwi, didn't get it at the testimony this month. how does this play out before the election, which is creeping up quickly? >> there are a couple of things that can happen. we have the fomc meeting next week and you have jackson hole,
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but there's a feeling growing on the floor that he may be pulling a kind of justice roberts routine, saying the fed's under threat. the republicans have already accused him of overtly helping the president, so he may decide to delay, to wait until september to implement some new easing, because that wouldn't, in all likelihood, directly affect the election because its impact would come probably at or after the vote, not in the weeks preceding. >> so the parallel to roberts is trying to protect the integrity of the institution than doing less than his supporters care for? >> well by trying to protect the institution and then by doing something that people really aren't looking at, okay? we need jobs. that's part of my mandate. i'll get you more money but i'm going to do it on my schedule and in my way, so you can't ause us of being politicized, just as
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roberts seemed to flip over to prevent it from being the traditional 5-4 that everybody was calling a political deal. >> so you're watching 1335, 1334? >> 34 through 37. 35 is a moving average but you got to give it a little bit of a bend because the pencil may not be that sharp. >> not much cushion at these levels. >> no. >> thanks very much. when we come back, have you been waiting until the market is just right to buy that private island you've always wanted? apparently now is the time. how you can get the island on the cheap when we come back. uh, i'm in a timeout because apparently
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the market for private islands is experiencing a sinking feeling, while buyers grabbed up the properties in the mid 2000s, obserwners are unloa prices and slashing prices. robert, you and i may have to go half and half. >> not really, some of the islands have gotten downright cheap and if you ever dreamed of owning one now might be the time. prices are down between 20% and
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80%. there are more than 600 islands for sale around the world, up from 400 five years ago and 130,000 islands priced less than a half million. this is off the coast of new zealand, 55 acres of wilderness, originally priced at $3.9 million, recently sold for $788,000, so big bargain there. another in the bahamas, leaf cay, got a number of beaches, that white sugary send, deepwater docks so you can park your mega yacht, a neighboring golf course to get to easily. originally this was $24 million. reduced to $7 million. now one of my favorites, this is buck's island in the british virgin islands near tortolla. comes with a cliffside mansion,
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infinity pools, great marinas, originally $50 million, now priced $35 million, but the real fire sale right now for islands is in greece, of course, the economic problems there, there are now more than a dozen islands for sale, none have closed. there's a lot of red tape and uncertainty over land ownership but now you can buy an entire chain of islands, carl, for less than 5 million euros so you know you're witch when you can say you have a private island but you're super rich when you have your own archipelago. >> yes, the tortolla one i might want to look at. one question, though, robert, we had you on a while ago, you talked about the so-called mansion cliff, people were worried about the uptick in the potential tax rates, is that why we're seeing the spike now? >> carl, a lot of it is because the dream of owning a private island turned out to be better than the reality, a big hassle to builden at islands, to get permits, to get there, you need to get there to fly, take a boat
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or plane. lot of people that bought islands, celine dion, craig mccaw are selling because they're not spending much time on them and costly to maintain. >> i imagine what a boat must cost or second home. robert frank, interesting stats. keep the tweets coming as we told you earlier, former yahoo! ceo scott thompson who left the company after that flap over his misstated credentials has a new job, he's now running a smaller private rival to amazon called shoprunner. what was it on his resume that caught the eye of his new company? tweet us. acceler-rental.
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and you still need to retire. td ameritrade's investment consultants can help you build a plan that fits your life. we'll even throw in up to $600 when you open a new account or roll over an old 401(k). so who's in control now, mayans? "squawk on the tweet" this tuesday morning. scott thompson left yahoo! over the flap over his misstated credentials, as of monday he's running a smaller private rival to amazon, called shoprunner. what was it on his resume that kaugt the eye? "a ceo with discount credentials
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for a discount shopping site, perfect match." "i'm willing to work cheap because i have a slight credibility problem." an grew writes "they were impressed by his work during the kids in the hall or the larry sanders show, wait, wrong take again." corn has had interest action in the last few minutes. >> as a matter of fact we closed the corn at 785.5 yesterday. 745.5 is the limit down. i'm looking at the board, traded down to 746.5, a penny away from limit. novi beans, down 70 cents at 1552.25. we're getting precip, the question is how much will it help, certain crops, certain fields, certain locales it will.
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last chart, currently premium to the u.s., 18 basis points, it's been below zero this year, an important trend to watch as we see booms reversing a bit. >> as we continue to watch our yields in spain and italy creep higher and higher. gary, i know you're watching some of that but also historical levels on the s&p? >> you know, we know the bond market you listen to rick and me you know what the bond market has been telling you. lot of people in europe expect this fall we'll have a significant realization that something has to be done, it's not going to be pretty. i say respect the technicals. look at a chart somebody sent me today. this going to be from march of 2008 to march of 2009. bring up the chart on the s&p. it was a quiet summer. bear stearns collapsed in march 2008. you see the may, june, july september period. it was quiet. it wasn't until september when something happened and you had the reaction to the market.